Obama Signs Debt-Ceiling Law. Now What?

President Barack Obama on Monday signed into law the congressional plan to temporarily suspend the debt ceiling until May 18, pushing back a political brawl over the country’s borrowing limit for several months but clearing the way for a number of other budget battles in the coming weeks.

The debt-ceiling suspension plan was developed by Republican leaders in the House of Representatives. In addition to taking the threat of a government cash crunch off the table for a few months, it also requires the House and Senate to pass budget resolutions by April 15, or lawmakers will risk missing out on their pay.

Here are some questions that are worth keeping in mind now that the law has been signed.

Q: Does May 18 REALLY mean May 18, or can the Treasury Department be creative and use emergency measures until August or so?

A: Good question, and no one really seems to know the answer. There is a widely held belief that the Treasury Department will be able to stretch things beyond mid-May, as it can suspend payments to pensions and other accounts if the government really faces a cash crunch. But how far? June? July? An extension from mid-May until early August is a good rule-of-thumb, as its the precise time window that Treasury put together during the 2011 fight.

But the window could also end up being narrower or wider, depending on the flow of government revenue and if spending levels change. The answer to this question is important, as Congress can wait until the last minute to reach agreements on the debt ceiling, and that can freeze economic activity or lead to financial market jitters.

Q: Phew. The debt ceiling has been taken care of. Now I can run my business and forget about Washington for a while, right?

A: Not exactly. The debt ceiling issue one certainly one of the most worrisome ones for many businesses, as they feared it could trigger a financial crisis if left unaddressed, but a number of other fiscal landmines are spaced out across the calendar. Here are some to consider.

Sometime in February or March – House Republicans are likely to pass a budget resolution, their first comprehensive post-election plan to deal with taxes and government spending.

March 1 – Around $85 billion in spending cuts are scheduled to begin through the end of September unless Congress intervenes (the so-called sequester, which would continue for eight additional years).

March (sometime) – the White House is likely to propose its budget plan for the fiscal year that begins October 1. It won’t be enacted by Congress, but it will frame much of the political debate going forward.

March 27 – government funding for a number of federal programs will expire. If Congress doesn’t vote to extend funding, there could be a partial government shutdown.

April 15 – this is the deadline for the House and Senate to pass budget resolutions or lawmakers won’t get paid.

Q: Does that mean we’ll see more budget standoffs for the next year?

A: Almost certainly, but things are little different this time. Democrats and Republicans have pledged to handle the budget debate differently this year and we are already seeing some changes. Republicans allowed a short-term reprieve on the debt-ceiling fight, when many people thought they had their most leverage, and Senate Democrats have pledged to approve a budget resolution for the first time in years. This might not seem like much in terms of progress, but lawmakers are actually following semi-normal budget procedure. That probably increases the odds, however slightly, that there will be an effort to put together a bipartisan tax and spending package in 2013. But make no mistake, the gulf between the two parties on tax and spending policies is wide and deep. If Democrats and Republicans can lock in a long-term budget deal in the next few months, they could take the debt ceiling issue off the table for a year or even longer. But make no illusions, this isn’t going to be as simple as naming a post office.

Below, David Wessel on what the debt ceiling is and why you should care.

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